Xtreme Drilling and Coil Services Reports Record Quarterly and Full Year 2013 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - March 5, 2014) -Xtreme Drilling and Coil Services Corp. (TSX:XDC) ("Xtreme", the "Company") announce fourth quarter and full year 2013 financial and operating results. It is anticipated that filing will take place on SEDAR of audited Consolidated Financial Statements and Notes to the audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended December 31, 2013, by Monday, March 10, 2014.

Highlights

Record adjusted EBITDA of $19.7 million in the fourth quarter of 2013, an increase of 11% over the previous quarter and 31% over the fourth quarter of 2012. The record quarter was driven by better operating margins in both the Drilling and Coil Services segments. For the year ended December 31, 2013, adjusted EBITDA increased 110% to $73.7 million as compared to $35.1 million for the prior year.

Record revenue of $62.7 million in the fourth quarter of 2013, an increase of 5% over the previous quarter and 21% over the fourth quarter of 2012. For the year ended December 31, 2013, the Company recognized revenue of $229.8 million, an increase of 28%, or $50.4 million from 2012. In addition, total operating days for 2013 increased to 8,063 as compared to 6,550 in 2012. The increase in revenue for the year was a function of 23%, or 1,513, more operating days in 2013 and an increase in average revenue per day to $29,277 from $27,387 in 2012.

For the fourth quarter, the Drilling Segment achieved utilization of 93% on 1,801 operating days. This was comprised of a 96% utilization rate for the 18 rig US XDR fleet and 75% for the three rig Canadian XDR fleet. For the year ended 2013, the Drilling Segment achieved utilization of 89% on 6,829 days. This was comprised of a 93% utilization rate for the 18 rig US XDR fleet and 66% for the three rig Canadian XDR fleet.

For the fourth quarter, the Coil Services Segment achieved utilization of 76% on 340 operating days. This was comprised of a 98% utilization rate for the two XSR units in Saudi Arabia and an 81% utilization rate for the three actively marketed XSR units in the US. Included in the Coil Services utilization is one additional unit that is currently idle in the US, but is actively being marketed both in the US and internationally. The US XSR units for the quarter averaged 18 operating days per month on each unit. For the year ended 2013, the Coil Services Segment achieved utilization of 65% on 1,234 operating days. This was comprised of a 98% utilization rate in for the two XSR units in Saudi Arabia and a 64% utilization rate for the three actively marketed XSR units in the US. As a reminder, the Company now uses 22 days as total available operating days for the US XSR units when calculating utilization.

The Drilling Segment (which includes US and Canada) increased operating profit to $64.4 million in 2013 as compared to $45.5 million in the previous year. This was driven by the US division which generated higher operating profits on higher utilization and increased operating efficiency, which resulted in an operating margin of 37.2% as compared to 32.1% in 2012.

The Coil Services segment (which includes US and Saudi Arabia) increased operating profit to $20.6 million in 2013 as compared to $6.0 million in the previous year. This was driven by the US division which had higher demand and pricing coupled with strong cost control and the Saudi Arabia division which increased profitability on higher pricing in 2013; primarily a result of the new contract signed in the third quarter of 2013. Overall operating margin as a percent of revenue increased to 36.3% in 2013 from 15.8% in 2012.

The Company completed a new $150 million credit facility in in the fourth quarter and finished 2013 with $117 million in net debt (total debt less cash) and a funded debt to EBITDA ratio of 1.7. This represents significant improvement from the peak funded debt to EBITDA ratio of 5.7 at June 30, 2012, and 3.6 at year end 2012.

Total capital expenditures were approximately $23 million, $22.5 million net of dispositions, during 2013. This is down significantly from total capital expenditures of $115 million in 2011 and $112 million in 2012. In 2014 capital expenditures are budgeted to be between $55 million and $60 million with approximately $25 million of this budgeted for existing fleet maintenance, spares and upgrades. The remaining capital will be spent on two new XSR deep coiled tubing units, the preparation and deployment of two XDR 300 drilling rigs to India, and the purchase of the 20% interest from the partner in the Company's Saudi Arabian joint venture. At year end, the Company had significant liquidity with approximately $28 million available on the credit facility and $42.1 million in working capital which includes $12.2 million of cash. Xtreme anticipates that 2014 capital expenditures will be funded through operating cash flow.

During the fourth quarter Xtreme recognized several one-time non-cash charges that impacted earnings. Absent these one-time charges and an additional $6.5 million in non-cash unrealized foreign exchange losses for 2013, pre-tax income would have been approximately $21.5 million as compared to the $4.9 million as reported for the year. In addition, earnings per share would have been approximately $0.16 as compared to $0.00 as reported. The fourth quarter non-recurring charges are detailed as follows:

As part of the normal review of fixed asset carrying values, it was determined that the Company would write off the value of certain spare, surplus and rig equipment. The total charge recognized during the quarter was $4.5 million which is equivalent to roughly 0.8% of total asset value. In addition, the Company re-evaluated the remaining useful lives of certain spare, surplus and rig equipment. This had the effect of increasing depreciation by approximately $2.9 million for the fourth quarter. Both of these are reflected in the depreciation expense of $20.8 million for the quarter. In 2014 the Company anticipates that depreciation expenses will average $11 to $12 million per quarter.

The Company also recognized a $1.5 million charge as part of the requirement under IFRS 13 to adjust to fair value the liability on the balance sheet relating to the 20% non-controlling interest in the Company's Saudi Arabian joint venture. This adjustment will not be necessary in 2014 as the Company closed the transaction to purchase the 20% interest in February.

Finally, Xtreme wrote-off $1.2 million of unamortized deferred loan costs related to the extinguishment of the previous debt facility. These expenses were being amortized over the life of the previous facility and are included in interest expense in the fourth quarter.

The Board is pleased to announce the appointment of J. William Franklin, Jr. as an independent director of Xtreme. Mr. Franklin is replacing Mr. Saad Bargach on the Board of Directors as representative for Lime Rock Partners. Mr. Franklin joined Lime Rock Partners in 2003 and was named a Managing Director in 2008. Currently based in Houston, Mr. Franklin has worked in the firm's Houston, Calgary, and Westport, Connecticut locations and has played a leadership role in the firm's investment efforts in the energy service and exploration and production sectors in North America and internationally.

Before joining Lime Rock Partners, he had experience in private equity, energy company operations, and energy finance at Riverstone Holdings from 2000 to 2003, Simmons & Company from 1996 to 1998, and Parker & Parsley Petroleum Company from 1995 to 1996. Mr. Franklin currently serves on the board of directors of Acoustic Zoom, GEODynamics, IDM Group, PDC Mountaineer, Shelf Drilling and UTEC International. He previously served on the board of directors of Hercules Offshore, Marauder Resources, PanGeo Subsea and Slate River Resources. He is a graduate of the University of Texas at Austin (B.A., B.B.A.) and Harvard Business School (M.B.A.).

An audio replay of the call will be available until Tuesday, March 12, 2014. To access the replay, call +1 800‐408‐3053 or +1 905‐694‐9451 and enter pass code 4828220.

Selected Quarterly Financial Information

Three months ended

Dec 31, 2013

Sep 30, 2013

Jun 30, 2013

Mar 31, 2013

Restated

Restated

Restated

Revenue

62,681

59,692

53,268

54,182

Adjusted EBITDA

19,734

17,783

16,847

19,234

Adjusted EBITDA as a percentage of revenue

31

30

32

35

Adjusted EBITDA per share - basic ($)

0.24

0.22

0.21

0.24

Net (loss) income

(7,441)

3,281

240

4,487

Net (loss) income per share - basic ($)

(0.09)

0.04

0.00

0.06

Capital assets

412,523

416,887

431,294

417,431

Total assets

515,720

504,728

520,326

508,823

Operating days

2,141

2,062

1,911

1,949

Utilization (percentage) - XDR

93

90

85

89

Utilization (percentage) - XSR

76

76

65

60

Utilization (percentage) - Total

90

87

81

83

Weighted average rigs in service

28.0

28.0

28.0

28.0

Total rigs, end of quarter

28

28

28

28

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Mar 31, 2012

Restated

Restated

Restated

Restated

Revenue

51,813

48,948

40,180

38,446

Adjusted EBITDA

15,029

4,459

7,695

7,909

Adjusted EBITDA as a percentage of Revenue

29

9

19

21

Adjusted EBITDA per share - basic ($)

0.19

0.07

0.12

0.12

Net (loss) income

3,827

(2,935)

(2,059)

1,689

Net (loss) income per share - basic ($)

0.05

(0.04)

(0.03)

0.03

Capital assets

415,354

425,364

425,397

379,710

Total assets

506,551

511,318

512,254

464,453

Operating days

1,891

1,742

1,494

1,423

Utilization (percentage) - XDR

85

86

74

84

Utilization (percentage) - XSR

58

45

69

63

Utilization (percentage) - Total

80

77

73

81

Weighted average rigs in service

26.8

26.0

23.4

19.8

Total rigs, end of quarter

28

28

27

18

Excerpt from Management's Discussion and Analysis for the twelve months ended December 31, 2013

OUTLOOK

As a company founded to break through traditional barriers in our industry, Xtreme Drilling and Coil Services has been setting records almost since inception. However, nothing in our history quite compares to 2013. It was an exceptional year on many fronts as we established new industry benchmarks with our field performance and surged past previous high-water marks for the company, both operationally and financially.

Our primary goal for 2013 was optimizing our operations and maximizing efficiency to capitalize on the aggressive fleet expansion we undertook in 2011 and 2012. We are proud to report we accomplished that mission. Last year was our busiest and most productive ever for both the Drilling (XDR) and Coil Service (XSR) segments of our company. Our operating days topped 8,000 for the first time ever, pushing our revenue to a record $229.8 million even as we maintained a similar rig count to 2012. Other key financial metrics hit historic levels as well, including operating profit margins and EBITDA.

Xtreme also made great strides in strengthening the balance sheet, using our growing free cash flows to substantially reduce leverage incurred during our $200+ million capital expansion program. We are pleased that the marketplace recognized this progress, as our share price increased by 118% in 2013.

Also of note, our business came full circle in an important sense in 2013. Xtreme's history is deeply rooted in driving innovation in coiled tubing drilling technology, and we have numerous patents to show for it. However, in recent years we shifted our focus almost entirely to traditional jointed pipe drilling in response to the rapid proliferation of horizontal wells in North American resource plays. Now we are excited to be putting that breakthrough coiled tubing technology to work again; this time for ultra-deep completions in those same long-lateral wells.

DRILLING SERVICES (XDR)

After growing our XDR drilling fleet dramatically in prior years, we maximized utilization levels on an unprecedented scale in 2013. At year-end, all 21 of these Tier 1 rigs were working, mostly on long-term contracts. Total operating days for the XDR division reached an all-time high of 6,834 days and utilization was 89% for 2013 as compared to 82% in the prior year.

Geographically, we continued to focus on two of North America's most prolific resource plays. Our largest presence is in the Niobrara Shale in Colorado and Wyoming, where 12 XDR rigs were working at year-end. There, our high-specification rigs continued to set the performance standard with superior mobility that accelerates drilling and reduces move times between well pads. We also further grew our presence in the Bakken Shale in North Dakota, where we had six rigs working at year-end. The other three XDR rigs were working in Canada.

"Our leading-edge technology and outstanding service quality truly set us apart in the XDR division's core operating areas of Colorado and North Dakota," Chief Executive Officer Tom Wood noted. "The market remains strong for Xtreme's drilling services in the Bakken and Niobrara, as our operational efficiency and best-in-class mobilization times continue to drive down costs for our customers."

The XDR division's high utilization levels are expected to continue into the future, as our large backlog of contracted days was in excess of 5,800 at the beginning of 2014.

COIL SERVICES (XSR)

Last year was full of accomplishment for our XSR coiled tubing division. After launching our extended-reach completion services in 2012, we have rapidly established ourselves as a market leader in the Eagle Ford Shale in South Texas. We are also the longest-reach provider in this basin, which ranks second in production volume among shale oil plays in the US. In fact, we set an Eagle Ford record in 2013 by reaching a total measured depth of 20,344 feet with coiled tubing-including a lateral length over 10,000 feet. These distinctions allowed us to increase both our service rates and utilization levels, as total operating days for the XSR division reached a new high of 1,234.

In addition to superior reach, Xtreme has established a reputation for outstanding performance with our proprietary large-diameter coil. XSR units are substantially accelerating completion plug millouts and reducing stuck-in-hole incidents. The XSR division had in excess of 16.8 million round trip run in feet with coiled tubing in 2013 without ever leaving pipe down hole. We are especially proud of that last accomplishment, as it highlights the unmatched reliability of our coiled tubing services. With that stellar track record, Xtreme is not only completing ultra-deep wells, but also gaining traction in the 14,000-16,000 foot market, as operators seek to mitigate risk.

Xtreme is achieving these successes by leveraging innovations we originally developed for coiled tubing drilling. For example, our XSR units utilize electric injectors and PLC-based controls for greater power and precision, and 2-5/8" coiled tubing for extended lateral reach. Recognizing the advantages, the market is increasingly favoring these technologies over traditional features such as hydraulic power and smaller-diameter coil. We believe this clearly differentiates Xtreme in the marketplace and offers our customers a value proposition no other company can match.

Additionally, two XSR units continue to perform re-entry drilling in Saudi Arabia, where we signed new three-year contracts with the operators we have worked there with since 2010. This project has been a tremendous technical and financial success for Xtreme.

After keeping the rig count unchanged and concentrating on our core markets last year, Xtreme's focus will return to growth in 2014-for both our fleet and geographical footprint.

Our XSR division will add new coiled tubing units as it seeks to meet demand in the Eagle Ford of South Texas, and looks at potential expansion into the Permian Basin in West Texas. We anticipate funding this initiative entirely with free cash, given the strength of our operating margins.

Also in 2014, the XDR division will look for opportunities to optimize the existing fleet and potentially move shallower depth capacity drilling rigs into new markets as the push toward deeper wells and larger equipment continues in the US. These efforts were already yielding results early in the year, when we signed a multi-year contract to relocate two XDR 300 rigs to India. We anticipate that these rigs will commence operations in the third quarter of 2014.

Finally, even with all that we accomplished last year, we see opportunities to further optimize our operations and drive profit margins. These efforts will continue in 2014, as we focus on pushing to greater depths and new heights while emphasizing capital discipline and ultimately working to maximizing value to our shareholders.

Xtreme Drilling and Coil Services Corp.

Consolidated Statements of Financial Position

At December 31, 2013, December 31, 2012 and January 1, 2012

(in thousands of Canadian dollars)

Dec 31, 2013

Dec 31, 2012

Jan 1, 2012

(Restated - Note 3)

(Restated - Note 3)

Assets

Current assets

Cash and cash equivalents

12,220

5,921

6,873

Accounts receivable

60,084

44,878

46,653

Other receivables

1,306

2,975

1,636

Prepaid expenses and other

2,491

2,047

2,114

Assets held for sale

-

9,308

-

Income tax recoverable

462

368

928

Inventory

8,181

6,474

6,470

84,744

71,971

64,674

Non-current assets

Deferred tax asset

14,536

15,006

7,576

Property and equipment

412,523

415,354

348,148

Intangible assets

3,917

4,220

4,523

Total Assets

515,720

506,551

424,921

Liabilities and Shareholders' Equity

Current liabilities

Bank indebtedness

-

7,834

-

Accounts payable and accrued liabilities

28,051

27,904

26,902

Fair value of non-controlling interest liability

12,763

-

-

Current portion of long-term debt

669

14,201

500

41,483

49,939

27,402

Long-term liabilities

Fair value of non-controlling interest liability

1,596

12,878

13,707

Long-term debt

128,407

125,727

81,936

Total Liabilities

171,486

188,544

123,045

Shareholders' equity

Share capital

328,416

327,197

310,296

Share option reserve

12,419

11,572

10,338

Accumulated deficit

(12,697)

(12,370)

(12,212)

Foreign currency translation reserve

15,143

(11,314)

(8,209)

Total Shareholders' Equity

343,281

315,085

300,213

Non-controlling interest

953

2,922

1,663

Total Liabilities and Shareholders' Equity

515,720

506,551

424,921

Xtreme Drilling and Coil Services Corp.

Consolidated Statements of Income

For the years ended December 31, 2013 and 2012

(in thousands of Canadian dollars, except share and per share data)

2013

2012

(Restated - Note 3)

Revenue

229,823

179,387

Expenses

Operating expenses

144,873

127,835

General and administrative expenses

11,280

10,226

Depreciation of property and equipment

51,192

27,266

Amortization of intangibles

303

303

Stock-based compensation

1,321

1,245

Foreign exchange loss (gain)

6,494

(1,790)

(Gain) loss on sale of equipment

(132)

257

Change in value of non-controlling interest liability

1,481

(829)

Impairment of accounts receivable

72

6,235

Impairment of assets held for sale

-

3,133

Loss on damage of property and equipment

-

538

Other expense

153

175

Interest expense

7,866

7,919

Income (loss) before tax for the year

4,920

(3,126)

Tax expense (recovery)

Current

3,870

2,775

Deferred

483

(7,175)

Total tax expense (recovery)

4,353

(4,400)

Net income for the year

567

1,274

Net (loss) income for the year attributable to:

Owners of the parent

(327)

(155)

Non-controlling interest

894

1,429

567

1,274

Net (loss) per common share attributable to equity owners of the parent

- basic

(0.00)

(0.00)

- diluted

(0.00)

(0.00)

Weighted average number of common shares

- basic

80,881,799

69,618,457

- diluted

81,351,825

69,759,835

Xtreme Drilling and Coil Services Corp.

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2013 and 2012

(in thousands of Canadian dollars)

2013

2012

(Restated - Note 3)

Net income for the year

567

1,274

Other comprehensive income (loss)

Items may be subsequently reclassified to profit or loss

Unrealized gain (loss) on translating

financial statements of foreign operations

26,751

(3,278)

Comprehensive income (loss) for the year

27,318

(2,004)

Xtreme Drilling and Coil Services Corp.

Consolidated Statements of Changes in Equity

For the years ended December 31, 2013 and 2012

(in thousands of Canadian dollars)

Equity attributable to the owners of the parent

Share capital

Share option reserve

Accumulated deficit

Foreign currency translation reserve

Total

Non-controlling interest

Total shareholders' equity

Balance at Jan 1, 2012 (Previously reported)

310,296

10,338

(4,325)

(8,596)

307,713

-

307,713

Effect of change in accounting policies

-

-

-

387

387

7,483

7,870

Balance at Jan 1, 2012 (Restated)

310,296

10,338

(4,325)

(8,209)

308,100

7,483

315,583

Impact of fair value of non-controlling interest liability

-

-

(7,887)

(7,887)

(5,820)

(13,707)

310,296

10,338

(12,212)

(8,209)

300,213

1,663

301,876

Net (loss) income for the year

-

-

(158)

-

(158)

1,432

1,274

Other comprehensive loss

Currency translation differences

-

-

-

(3,105)

(3,105)

(173)

(3,278)

Total comprehensive (loss) income

-

-

(158)

(3,105)

(3,263)

1,259

(2,004)

Employee share option scheme:

Value of employees services

105

1,339

-

-

1,444

-

1,444

Proceeds from shares issued

16,796

-105

-

-

16,691

-

16,691

Total transactions with owners

16,901

1,234

-

-

18,135

-

18,135

Balance at Dec 31, 2012 (Restated)

327,197

11,572

(12,370)

(11,314)

315,085

2,922

318,007

Balance at Jan 1, 2013 (Restated)

327,197

11,572

(5,312)

(11,314)

322,143

8,742

330,885

Impact of fair value of non-controlling interest liability

-

-

(7,058)

(7,058)

(5,820)

(12,878)

327,197

11,572

(12,370)

(11,314)

315,085

2,922

318,007

Net (loss) income for the year

-

-

(327)

-

(327)

894

567

Other comprehensive income

Currency translation differences

-

-

-

26,457

26,457

294

26,751

Total comprehensive income

-

-

(327)

26,457

26,130

1,188

27,318

Dividends

(3,157)

(3,157)

Employee share option scheme:

Value of employee services

478

1,325

-

-

1,803

-

1,803

Proceeds from shares Issued, net of issue costs

741

(478)

-

-

263

-

263

Total transactions with owners

1,219

847

-

-

2,066

(3,157)

(1,091)

Balance at Dec 31, 2013

328,416

12,419

(12,697)

15,143

343,281

953

344,234

Xtreme Drilling and Coil Services Corp.

Consolidated Statements of Cash Flows

For the years ended December 31, 2013 and 2012

(in thousands of Canadian dollars)

2013

2012

(Restated - Note 3)

Cash flow provided by:

Operating activities

Net income for the year

567

1,274

Items not affecting cash:

Depreciation and amortization

51,495

27,569

Stock-based compensation

1,321

1,245

Unrealized foreign exchange loss (gain)

6,494

(1,659)

(Gain) loss on sale of equipment

(132)

257

Change in fair value of non-controlling interest liability

1,481

(829)

Impairment on accounts receivable

72

6,235

Impairment on assets held for sale

-

3,133

Loss on damage of property and equipment

-

538

Interest expense

7,866

6,963

Interest paid

(7,656)

(6,491)

Amortization of debt issuance costs

1,380

966

Current tax expense

3,870

2,775

Deferred tax expense (recovery)

483

(7,175)

Taxes paid

(217)

-

Changes in items of working capital

(5,122)

(4,519)

Net cash generated from operating activities

61,902

30,282

Financing activities

Proceeds from shares issued, net of issue costs

-

16,192

Proceeds from exercise of stock options

741

255

Proceeds from long-term debt

12,512

66,260

Proceeds from long-term debt

129,632

-

Repayment of long-term debt

(158,609)

(5,605)

Repayment of (proceeds from) operating facility

(7,834)

7,834

Dividends paid to joint venture partner

(1,276)

-

Debt issuance cost

(1,247)

(1,459)

Net cash (used in) generated from financing activities

(26,081)

83,477

Investing activities

Proceeds from sale of equipment

569

681

Capital expenditures

(23,059)

(112,357)

Net cash used in investing activities

(22,490)

(111,676)

Effect of exchange rate changes on cash and cash equivalents

(7,032)

(3,035)

Increase (decrease) in cash and cash equivalents

6,299

(952)

Cash and cash equivalents - beginning of year

5,921

6,873

Cash and cash equivalents - end of year

12,220

5,921

Xtreme Drilling and Coil Services Corp.

EBITDA and Adjusted EBITDA

For the years ended December 31, 2013 and 2012

(in thousands of Canadian dollars)

2013

2012

Net income

567

1,274

Tax expense

4,353

(4,400)

Interest expense

7,866

7,919

Amortization of intangibles

303

303

Depreciation of property and equipment

51,192

27,266

EBITDA

64,281

32,362

2013

2012

EBITDA

64,281

32,362

Adjustments for non-cash and one-time gains and losses

9,317

(404)

Adjusted EBITDA

73,598

31,958

Adjusted EBITDA per share ($)

0.91

0.46

Net (loss) income per share ($)

(0.09)

0.02

Adjusted EBITDA attributable to:

Owners of the parent

72,704

30,107

Non-controlling interest

894

1,851

73,598

31,958

2013

2012

Stock-based compensation

1,321

1,245

(Gain) loss on sale of equipment

(132)

257

Foreign exchange (gain) loss

6,494

(1,790)

Change in fair value of non-controlling interest liability

1,481

(829)

Loss on damage of property and equipment

-

538

Other expense

153

175

9,317

(404)

Reader Advisory

This news release contains forward-looking statements ("FLS"). The use of the words "may", "believe", "could", "would", "might", "will be taken", "occur" or "be achieved" and similar expressions identify FLS. More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet. Further, the FLS herein may relate to trade credit insurance carried by the Company to mitigate receivables collection risk. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 4, 2014, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise, or to explain any material difference between subsequent actual events and such FLS.

Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States and Saudi Arabia. For more information about the Company, please visit www.xtremecoil.com.